MTR Corp joint venture signs letter of intent for Beijing Metro Line 16
The company, 49 per cent owned by the Hong Kong rail operator, signs letter of intent to invest in, operate and maintain the 50-kilometre track
A MTR Corp joint venture has signed a letter of intent with the Beijing municipal government to invest in, operate and maintain Beijing Metro Line 16, which will partially open by the end of 2016.
Beijing MTR Corp, a joint venture that is 49 per cent owned by MTR, will participate in the investment, operation and maintenance of Line 16. Beijing MTR will be responsible for about 30 per cent of the project's capital cost - at about 15 billion yuan (HK$19 billion) - which covers electrical and mechanical systems, and rolling stock.
MTR will also contribute an additional equity of 2.45 billion yuan to Beijing MTR.
The other two shareholders of Beijing MTR are companies owned by the Beijing municipal government - Beijing Capital Group, which owns 49 per cent of the joint venture, and Beijing Infrastructure Investment, which holds 2 per cent.
Beijing Infrastructure Investment will undertake the remaining 70 per cent of the capital costs, or 49.5 billion yuan, covering the line's civil construction.
Beijing MTR will undertake the operations and maintenance of Line 16 for a term of 30 years.
"With Beijing MTR, our railway business in Beijing would be extended to about 150 kilometres after Line 16 opens and we will continue to contribute to the sustainable mass transit development of Beijing," said Lincoln Leong, the acting chief executive of MTR.
Construction work of Line 16 started in March last year. The Beijing government's target is to open phase one of the line by the end of 2016 and the entire line after 2017.
It will stretch 50km running north-south through three major districts of the capital - Haidian, Xicheng and Fengtai.
The capital's metro network was used by 10 million commuters every day, said Richard Wong, general manager of Beijing MTR.
Beijing MTR and the municipal government reached a preliminary agreement on the project, which will be subject to final approval by the Beijing municipal government.
Beijing MTR also officially signed the concession agreement for the Beijing Metro Line 14 project with the municipal government yesterday.
According to MTR's interim report, the existing Beijing metro lines operated by Beijing MTR, including Line 4 and Daxing Line, saw a combined commuter traffic of 220.9 million passenger trips in the first half of this year, with an average weekday patronage of more than 1.2 million.
Analysts said MTR's mainland and overseas rail businesses were still at an early stage and it would take time for them to become major contributors to the firm's overall profit.
Beijing Metro has been talking about raising fares, which have been kept low.
The reported that a hearing about Beijing's public transport costs was held last month to discuss the metro fares.
